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Burger King and Other Chains Raise Prices After California’s $20 Minimum Wage Hike

Source: Dale Morin / CalMatters

The economy and inflation are two issues that are very important to Americans, and that has been especially true the last several years. The coronavirus pandemic triggered a series of economic anomalies that America and other countries around the world are still dealing with, and Joe Bide has spent a significant amount of his presidency attempting to mitigate the problems that come along with an overheating economy.

Factors Causing Inflation

Many of the factors that cause inflation and a hot economy are unfortunately out of the President’s control, despite the fact that many Americans on both sides of the aisle like to blame him for the problems. 

Source: Wikimedia/The White House

The COVID-19 pandemic was only the beginning of a series of factors that led to a significantly heating economy, and rapidly rising prices. Significant supply and decreased demand caused prices to skyrocket in industries across the board, including real estate, gas and groceries, and that was only the beginning. 

Money from the Pandemic

Inflation is primarily caused by too much money in the economy. People who have too much funds spend recklessly, and when more money is pumped into the economy, prices rise. The beginning of the pandemic saw the United States government sending thousands of dollars to everyday Americans, and it was unsurprising that inflation started to rise when people spent these pandemic funds. 

Source: Wikimedia/Daniel Capilla

Other issues caused inflation to rise further. Kinks in the supply chain, the war in Ukraine, the war in Israel, all of these global events served to raise prices for everyday Americans, much to everyone’s irritation. But there was another insidious factor of inflation, one that is still being studied and understood: profit. 

Seeking to Understand Inflation

This is a less understood factor of inflation, one that Americans and the government are still looking to comprehend. When prices started rising at the beginning of the pandemic, many people believed that it was merely a product of the pandemic, part of the natural rise and fall of inflation that comes with global events. 

Source: Wikimedia Commons

As the months wore on, though, companies were reporting record profits in spite of the economy struggling, and people started getting suspicious. And these suspicions have since been confirmed in a few cases, with more data on the way: companies were artificially inflating prices during the pandemic in order to boost corporate profits. 

About Greedflation

This is a phenomenon that has been called “greedflation.” One of the most blatant examples of greedflation is the cost of eggs during 2023.

Source: Pexels/Karolina Grabowska

While there were some external factors that caused the price of eggs to soar, such as an outbreak in avian bird flu that killed a significant number of chickens across the United States, studies that are coming out show that the companies who were responsible for supplying eggs increasing their prices far beyond the price adjustment necessary for inflation, and pocketed the profits at the quarterly review. 

Wages Steadily Increasing

The pattern of increasingly high prices in the United States, as well as an incredibly hot job market where job seekers have more than their pick of jobs, has led to jobs increasingly raising salaries, both to appeal to new workers and to keep the ones that they already have. 

Source: Pexels/Pixabay

Increasing wages in particular is admirable, but has the unfortunate side effect of further driving inflation. Some of these prices increases have been voluntary, done on the part of the company, and others have had a more powerful hand pushing them to do the right thing. 

A Recent Minimum Wage  Hike in California

This is what has recently happened in the state of California. Last September, Governor Gavin Newsom signed a new bill into law, which raised the minimum wage for certain fast food restaurants up to $20 an hour, up from the previous minimum of $16 an hour. 

Source: Wikimedia Commons

Proponents of the law explained that it was because fast food restaurants are often marginalized workers, and the stigma against fast food often means they’re underpaid. People deserve to be able to afford their bills regardless of what they do for a living, according to Newsom. 

Immediate, and Predictable, Repercussions

Unfortunately for both Newsom and California workers alike, there were some immediate repercussions to the law. For instance, delivery drivers for Pizza Were let go in a move that impacted thousands of people, eliminating the in-house delivery department for Pizza Hut altogether. 

Source: Wikimedia Commons

Other restaurants, on the other hand, decided that preserving corporate profits was more important than caring for their employees and their customers. Since the bill went into effect, multiple different restaurant chains have chosen to raise their prices in order to mitigate the loss in profit that comes from the increase in labor costs.

Which Businesses Does the Law Apply to?

The law on minimum wage applies to restaurants offering limited or no table service, and which are part of a national chain with at least 60 establishments nationwide.” This carves out an exception for sit-down restaurants, which operate under an entirely different business model than fast food places.

Source: Pexels/Andrea Pacquiado

The increase of $4 an hour from the previous minimum wage is a significant hike, and restaurants have already started to raise their prices in order to compensate for the increase in labor costs. 

Various Price Changes

For instance, the Texas Double Whopper meal at Burger King increased from $15.09 to $16.89. Similarly, the price of the Big Fish Meal rose from $7.49 to $11.49, with other menu items increasing by 25 cents to $1.

Source: Wikimedia/Michael Rivera

Restaurants that are known for their low prices, like In-N-Out, weren’t able to escape the price increases either. In-N-Out raised burger prices by 25 cents and soft drink prices by a nickel. Likewise, Hart House – owned by actor and comedian Kevin Hart – raised milkshake prices by a dollar, sandwich prices by 50 cents, and large fries by $1.10, bringing their price to $5.99. 

Restaurants that Have Held Back

Restaurants like Chik-fil-A, McDonald’s, and Wendy’s haven’t yet raised their prices, but if the pattern continues, it seems likely that the hikes are imminent. 

Source: Forbes

All of these price hikes are a stark example of how these corporations are more concerned with preserving profit over taking care of their employees. People against raising the minimum wage always say that prices will increase in response, without acknowledging the fact that prices have already increased; companies have gotten used to increased levels of profit, and don’t want to give it up in order to pay a living wage. 

An Important Law, but the Repercussions are Just Beginning

During a news conference, Gavin Newsom emphasized the significance and importance of the new minimum wage law. “This is a significant development…Eighty percent of the workforce comprises people of color, with two-thirds being women, many of whom are primary earners.”

Source: Wikimedia Commons

And while the increased prices will be nice in other areas of life, the reality is that fast food chains raising the prices of menu items is just the initial impact of increasing workers’ income. 

Issues Around Staffing Levels

In addition to higher menu costs, another significant issue that could arise from the increase in labor costs are staffing levels. Previously, an hour of work for two employees cost a company $32. Now, with the new law, those same employees will cost a fast food joint $40. 

Source: Wikimedia Commons

This fact of basic math raises the question of whether these fast food chains will continue to maintain the same levels of staffing that they would have before the minimum wage was hiked. Some workers may face layoffs, and those who are left behind may have to take on more responsibilities in order to compensate for the smaller workforce. 

The Full Effects Have Yet to be Realized

As with many things, in this situation, the ones who are ultimately going to be punished are the consumers. Economic changes do not occur in isolation, and every decision triggers a chain reaction that reverberates through the economy. 

Source: Wikimedia/Gage Skidmore

The interconnectedness of wages, staffing levels, layoffs, and more is something that Gavin Newsom seems content to ignore. The increase in minimum wage is one that is going to have a wide-ranging impact on the economy that has yet to be fully realized, and some Californians, unfortunately, are going to suffer.

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James Cross

Written by James Cross

James Cross, an enigmatic writer from the historic city of Boston. James' writing delves into mysteries, true crime, and the unexplained, crafting compelling narratives that keep readers and viewers on the edge of their seats. His viral articles, blog posts, and documentary-style videos explore real-life enigmas and unsolved cases, inviting audiences to join the quest for answers. James' ability to turn real mysteries into shareable content has made him a sensation in the world of storytelling.

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